RBS chief Hester likely to get 1.6 mn pounds bonus: Report

PTIFeb 21, 2010, 12.59pm IST

LONDON: The Royal Bank of Scotland, which is majority-owned by the British government, is expected to pay a bonus of nearly 1.6 million pounds to its CEO Stephen Hester.

"Stephen Hester, chief executive of Royal Bank of Scotland, is in line to collect a bonus of up to 1.6 million pounds despite the bank posting losses of several billion pounds," the Sunday Times has reported.

RBS is to announce its results later this week. The publication noted that although Hester is yet to make a final decision on whether to accept the pay deal, it is understood that the conditions in his contract would permit a large payout.

"The deal comes amid continuing controversy over bonuses at taxpayer-backed banks. RBS, 84 per cent-owned by the state thanks to huge injections of government funds, will confirm this week that it is to pay out 1.32 billion pounds in bonuses to its investment bankers," it added.

Meanwhile, the report said that another British major Lloyds Banking Group is anticipated to award 200 million pounds to its staff and is on a collision course with investors over a bonus for its CEO Eric Daniels.

According to the publication, RBS and Lloyds are expected to post combined losses of about 12 billion pounds this week, bogged down by enormous charges for bad debts.

"Hester's package is linked to targets based on RBS' restructuring, rather than simply its profitability," the report said.

The Sunday Times pointed out that the British government had to persuade Hester to take the job, luring him away from his previous role as the chief executive of the property major British Land.

"He agreed to replace Sir Fred Goodwin on condition that he would be paid a commercial rate and left to run RBS free from political interference," it added.

There would be pressure on Hester since banking major Barclay's CEO John Varley and its President Bob Diamond recently turned down their payouts.